Chairman's and CEO's Statement

Email This Print This

Extracted from Annual Report 2016

Dear Shareholders,
On behalf of the Board of Directors of BSL Corporation Berhad, we present this year's Annual Report and Financial Statements for the year ended 31 August, 2016.

Financial Review

For the financial year under review, the Group turnover for continuing operation increased by RM10.2 million or 10.4% to RM108.3 million compared to RM98.1 million in the previous year.

The Group reported a profit after tax for the financial year ended 31st August 2016 of RM4.59 million, compared to the loss after tax of RM3.53 million the previous financial year.

The improved result was contributed by the conversion of doubtful debt into securities, the improved performance of PCBA operation and the disposal of vacant factory in Klang.

Profit per share for the continuing operations of the Group is 4.9 sen.

Operational Review

The stamping division's turnover continued its recovery for second year in a row. Turnover increased from RM75.4 million to RM96.9 million or a 28.5% hike. Profit before tax however fell from RM0.94 million to RM0.18 million due to several factors. We incurred significant development costs of about RM1 million for two up-coming projects. The stamping division had to invest in packaging racks to cater for the production and delivery of Back Chassis for a reputable TV maker located at Bangi. We further incurred development and travelling cost for our new EMS model production of air sanitizer and air purifier. Both projects are expected to contribute significantly in the financial year 2017. Several clients also moved to higher mix to increase their product range and therefore reverted to manual stamping process that is less profitable to us. Furthermore, minimum wage increased from RM900 to RM1,000 per month, which we duly complied in July 2016. We are optimistic that our turnover will continue to increase for the third year running from the contribution of the two new projects mentioned earlier and from the benefits of a weakened Ringgit.

Our PCB assembly division posted a drop in sales from RM14.7 million to RM11.6 million. Our client involved in the production of home appliances decided to consign components to us for assembly instead of selling. Therefore our sales to them comprised purely of assembly sales without material, which was the main reason for the sales decline. Despite the drop, the PCB assembly division managed to report a profit after tax of RM2.2 million compared to a loss after tax of RM5.8 million. The profit was due to non-operational income derived from the conversion of doubtful debts provided in previous year to the client's share listed in National Stock Exchange of Australia for a total equivalent to RM3.3 million and further helped by higher efficiency in production and lower cost of quality. Close monitoring, tight control and frequent implementation of positive changes helped lower operational cost. Our quality, delivery and inventory control have all shown improvement resulting in higher confidence level from our clients. We believed we have reach the bottom of the sales drop and should post an improved sales number for the new financial year./p>

The forging division's sales decreased due to a key client who changed the material of their component. This division posted a loss of RM0.19 million compared to a loss of RM0.24 million a year ago. The merger of stamping and forging divisions is timely to absorbed the sales fluctuations and to share operating costs thus cushioning the impact from the sales loss.

Corporate Developments

We are moving aggressively towards our EMS business model. This year we participated in Electronica Munich with our own promotional booth. We received visitors not just from Europe but other parts of the world. Besides the exhibition in Munich, we also invested in marketing materials such as brochures and a promotional video. We hope to continue our participation in future electronics exhibition to increase our company's exposure.

Our investment (via BSL Eco Energy ) into green energy is progressing well. We have started with a 1 mega watt farm at UTM's car park. This solar farm should generate income via the Feed-In-Tariff(“FIT”) program by SEDA beginning January 2017. Besides solar farm, BSL Eco Energy is also involved in the production of inverters. Our inverters had successfully received SEDA's approval in November 2016 for local tariff bonus. Users of our inverters will enjoy higher tariff from SEDA through the FIT programs. We are encouraged by the smooth progress of both projects and are looking into expanding our solar business in the near future.

Our PET aerosol and hand sanitizer/air purifier projects had been hit by slight delays but are still progressing. The clients for PET aerosols are demanding for flat bottom PET bottles instead of petaloid based bottoms. We are finalizing the solution for flat bottom with PET bottle makers and machine maker. We hope that this is the last obstacle before commercialization to begin soon. The hand sanitizer/air purifier project is due to begin in the third quarter of the new financial year. A last minute design change has delayed the project.

In the last financial year, two significant events happened. We sold our former PCBA factory located in Meru, Klang for a gain of RM167,000,00. It was a reasonable sale value in view of the softening property market. In May 2016, BSL also bought over the remaining shares held by Xadacorp in our subsidiary Advance Automotive Industries Sdn. Bhd. This marked the end of our venture into trading and localization of car components for foreign car brands being assembled in Malaysian.


The Board does not recommend any dividend payment in respect of the financial year ended 31st August 2016. We decided to be financially conservative in view of the uncertain economic condition

Corporate Governance

The Board appointed an independent accounting firm to carry out orderly and timely third party internal audit review on the Group's operations and internal procedures. Thus far four internal audit reports have been issued and the Group has implemented the recommendations arising from these internal audit reports.

The Board remains resolute that the Group will continue to improve on the Group's best practices and adhere to the recommendations of the Malaysian Code on Corporate Governance 2012.

The level of compliance is set out in our Statement of Corporate Governance in pages 16 to 27.

Current Year Outlook

We invested quite significantly to prepare for two projects (back chassis of LCD TV and hand sanitizer/air purifier) and believed that both projects will contribute significantly to our new financial year.

The significant weakening of Ringgit in recent months should have a positive benefit to our business as well. We believe our clients will be attracted to the lower cost of manufacturing in Malaysia. Nevertheless, our Group still need to be cautious with possible increases in minimum wage, transport cost, utilities rate and so on.


On behalf of the Board, we would like to acknowledge and recognise the contribution by all the Directors, management and employees of the Group for their continuous support and commitment towards our achievements. I also would like to thank our shareholders, clients, business associates, partners and the relevant government authorities for their continuing support to the Group.

Thank you.

Ngiam Tong Kwan

27 December 2016

Investor Relations